Spirit Airlines, the Florida-based low-fare carrier that has yet to join the low-cost airline profit trend, has attracted $100 million in new equity to hasten its move to an all-Airbus A320 family fleet.
The carrier, the largest privately held airline in the USA, will also extend fuel hedging to full coverage for the rest of this year and into 2006. In this year’s first quarter it lost $5.4 million on $132 million in revenues, filings with the US Department of Transportation show.
Spirit’s largest investor, Los Angeles-based Oaktree Capital, joined Spirit management for $70 million of the new equity, while a Goldman Sachs fund supplied the remaining $30 million. When Oaktree took a 51% stake in Spirit in February 2004, the carrier announced it would replace its Boeing MD-80s with 35 A320 family twinjets. The high price of fuel has made the MD-80s uncompetitive with AirTran Airways’ Boeing 717s, JetBlue Airways’ A320s and Southwest Airlines’ Boeing 737s.
Spirit’s new funding will bring the fleet transition forward from 2008 to early 2007; the order will include three additional A321s ordered days after the cash infusion. At catalogue prices, the total order is worth over $2 billion to Airbus (Flight International, 21 December 2004–3 January).
Spirit has received 11 of its 35-aircraft Airbus order and will take five more by year-end. Its president Ben Baldanza says Spirit will increase its Caribbean and Latin American network to about 25% of its capacity, to balance its US destinations.
Source: Flight International
